Correlation Between Bilia AB and FM Mattsson
Can any of the company-specific risk be diversified away by investing in both Bilia AB and FM Mattsson at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bilia AB and FM Mattsson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bilia AB and FM Mattsson Mora, you can compare the effects of market volatilities on Bilia AB and FM Mattsson and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bilia AB with a short position of FM Mattsson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilia AB and FM Mattsson.
Diversification Opportunities for Bilia AB and FM Mattsson
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bilia and FMM-B is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bilia AB and FM Mattsson Mora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FM Mattsson Mora and Bilia AB is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bilia AB are associated (or correlated) with FM Mattsson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FM Mattsson Mora has no effect on the direction of Bilia AB i.e., Bilia AB and FM Mattsson go up and down completely randomly.
Pair Corralation between Bilia AB and FM Mattsson
Assuming the 90 days trading horizon Bilia AB is expected to generate 0.83 times more return on investment than FM Mattsson. However, Bilia AB is 1.2 times less risky than FM Mattsson. It trades about 0.03 of its potential returns per unit of risk. FM Mattsson Mora is currently generating about 0.01 per unit of risk. If you would invest 10,289 in Bilia AB on August 30, 2024 and sell it today you would earn a total of 2,401 from holding Bilia AB or generate 23.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bilia AB vs. FM Mattsson Mora
Performance |
| Timeline |
| Bilia AB |
| FM Mattsson Mora |
Bilia AB and FM Mattsson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bilia AB and FM Mattsson
The main advantage of trading using opposite Bilia AB and FM Mattsson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilia AB position performs unexpectedly, FM Mattsson can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FM Mattsson will offset losses from the drop in FM Mattsson's long position.The idea behind Bilia AB and FM Mattsson Mora pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FM Mattsson vs. Hexagon AB | FM Mattsson vs. Investor AB ser | FM Mattsson vs. Investment AB Latour | FM Mattsson vs. ASSA ABLOY AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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